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Medicare losing on costly prescription drugs

Failure to track Doctors who use cheaper generics hit taxpayers in wallet

By Charles Ornstein,

Tracy Weber and Jennifer LaFleur

ProPublica

Posted:
11/19/2013 03:37:28 PM MST

Medicare is wasting hundreds of millions of dollars a year by failing to rein in doctors who routinely give patients pricey name-brand drugs when cheaper generic alternatives are available.

ProPublica analyzed the prescribing habits of 1.6 million practitioners nationwide and found that a tiny fraction of them are having an outsized impact on spending in Medicare's massive drug program.

Just 913 internists, family medicine and general practice physicians cost taxpayers an extra $300 million in 2011 alone by disproportionately choosing name-brand drugs. These doctors wrote at least 5,000 prescriptions that year, including refills, and ranked among the program's most prolific prescribers.

Many of these physicians also have accepted thousands of dollars in promotional or consulting fees from drug companies, records show.

While lawmakers bitterly disagree about the Affordable Care Act, Medicare's drug program has been held up as a success for government health care. It has come in below cost estimates while providing access to needed medicines for 36 million seniors and the disabled.

But this seeming fiscal success has hidden billions of dollars lost to unnecessarily expensive prescribing over the program's eight-year history.

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The waste is exacerbated by a well-meaning benefit written into the drug program, known as Part D: Low-income patients pay less than $7 per prescription regardless of a medication's cost. The unintended consequence is that doctors can dole out name brands without fear of push back from patients about price.

Taxpayers spent $62 billion last year on Part D -- more than a third of it on this low-income subsidy, sometimes called Extra Help.

Top prescriber

Dr. Hew Wah Quon is one of Medicare's top prescribers. From a worn office in Los Angeles' bustling Chinatown, he churned out $27 million worth of prescriptions from 2009 to 2011, data show.

All Quon's patients in 2011 qualified for the low-income subsidy. He mostly prescribed name brands, such as AstraZeneca's Crestor, for high cholesterol. Crestor costs more than $6 a pill; the leading generic costs as little as 20 cents.

If Quon had prescribed the way other internists in California do, choosing drugs so his average cost was similar, he alone would have saved Medicare $5 million, ProPublica's analysis shows.

"Boy, this doctor is a walking economic disaster," said Dr. Jerry Avorn, a Harvard medical professor and expert on prescription drugs.

When first contacted by ProPublica last year, Quon defended some of his choices but abruptly ended the interview and has since declined to comment.

Others who prescribe similarly said they believe name-brand drugs do a better job. But numerous studies show that generics, which must meet rigid Food and Drug Administration standards, work just as well for most patients.

The Centers for Medicare and Medicaid Services, which administers Medicare, declined to make an official available for an interview and would not answer specific questions. "By law, Medicare must cover items and services that are reasonable and necessary," a CMS spokesperson said in an email. "Within those rules, doctors and their patients are free to make medical treatment decisions that are best for the patient."

In the past, agency officials have said that while Part D is a government program, private insurers are responsible for running it. They normally decide how to manage their drug plans but cannot increase prices for the poor.

Some say Medicare should establish penalties and bonuses to encourage more cost-effective habits.

"I just don't see how that's different from holding them accountable for the quality of care in the exam room or in the operating room," said Dr. Nancy Morden, an associate professor at the Dartmouth Institute for Health Policy and Clinical Practice, which has studied Part D.

King of the name brands

Quon's unassuming office, just outside downtown Los Angeles, is wedged between a bank and a budget hotel. In 2011, some 80,000 prescriptions flowed from here and his other office nearby in Monterey Park.

Quon, 62, was the nation's top prescriber that year for a dozen name-brand drugs and second-highest for another 13.

Crestor was high on his list -- he prescribed it 5,250 times, more than double any other doctor in Part D. Doctors typically find that generics such as simvastatin work well to treat the risks from artery-clogging cholesterol.

Quon also liked Lovaza, a purified and concentrated fish oil.

The drug is marketed by GlaxoSmithKline to treat very high triglycerides, fats in the blood linked to heart disease. At more than $90 per prescription in 2011, Lovaza's price dwarfed over-the-counter fish oils that sold for a few dollars a bottle.

Quon prescribed Lovaza 4,700 times, tops in the country.

Dr. Steven Nissen, chairman of cardiovascular medicine at the Cleveland Clinic, said it is "absolutely inconceivable" to treat so many patients "with a drug approved only to treat a relatively rare disorder."

Prescribers and payments

ProPublica's analysis of potential savings focused on primary care doctors because they treat a wide range of conditions for which generics are often available.

Collectively, the data show, the drugs ordered by Quon and others in the group of high name-brand prescribers cost Medicare more than $1 billion in 2011.

Nearly a third of that could have been saved if their prescribing had the same average cost as their peers.

Many of the doctors in this group also have financial ties to the companies whose pills they prescribe.

Since 2009, about 48 percent of them, Quon included, received at least $1,000 in speaking, consulting or other promotional payments, according to drug company disclosures ProPublica has compiled.

By comparison, among a random sample of doctors who prescribed mostly generics, only 15 percent received industry money and amounts typically were less.

For the poor, priciest pills

Part D was created amid a partisan fight over who should run the program -- the government or private industry. But it was accepted that no matter who was in charge, poor Medicare enrollees would need extra help paying their drug bills.

Today, this special subsidy has ballooned into the program's biggest cost, rising 35 percent since 2007, to $22.8 billion in 2012, according to the Medicare Payment Advisory Commission (MedPAC), a group that reports to Congress on Medicare.

For the more than 11 million who get the subsidy, the price difference between a generic and a brand name is only $4. Even the most expensive drugs cost patients $6.60 or less, giving them -- and their doctors -- little incentive to be cost conscious.

For others in Part D, typical co-pays for name-brand drugs -- $40 to $85 -- deliver a strong push toward generics, which generally cost less than $5.

ProPublica's Eric Sagara contributed to this report.ProPublica's Eric Sagara contributed to this report.

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